Human embryonic stem (ES) and embryonic germ (EG) cell lines provide unprecedented opportunities to study self-renewal and differentiation of embryonic and adult stem cells, and to develop novel cell-based clinical therapies. Emerging data has revealed that human ES/EG cells are pluripotent like their mouse counterparts, but also distinct in many critical properties of cell proliferation and differentiation. Therefore, it is necessary to study directly human ES/EG cells and their differentiation. We have begun to use human ES/EG cells and their immediate progeny, embryoid body-derived (EBD) cells, for hematopoietic differentiation, building upon our previous studies with mouse ES and EG cells. With the H1 (WA01) human ES (hES) cell line, we have made significant progress in 3 areas: 1) developed a method to generate both lymphoid (B and NK) and myeloid cells from differentiated hES cells; 2) developed a method to efficiently and stably transduce hES cells by lentiviral vectors; 3) developed a culture system to expand hES cells on human marrow stromal cells (hMSCs) in replacing previously required mouse feeder cells. Therefore, we planned a 2nd stage project to improve and elucidate mechanisms of lympho-hematopoietic differentiation from hES cells and non-tumorgeneic EBD cell lines. The overall goal is to produce transplantable lympho-hematopoietic progenitors capable of engrafting in NOD/SCID mice. In addition to using hMSCs as stroma, we will also use lentiviral vectors to express key regulatory genes such as VEGF, Notch as well as HoxB4 in hES cells to further facilitate self-renewal and engraftment of the generated lympho-hematopoietic progenitors. These approaches will allow us to define external/internal signals required for the genesis and self-renewal of human hematopoietic stem cells. Later on, we will directly examine the generation and functionality of antigen-presenting cells (APCs) which express high levels of MHC class II complex and regulate T cells. Using APCs derived from hES and EBD cells (+/- gene modification), we will attempt to inactivate alloreactive T cells and explore strategies ultimately leading to immune tolerance induction. This research project will allow us to better understand early events of human lympho-hematopoiesis and human stem cells. It will also provide a foundation for developing novel ES cell-based therapies that require reconstituting or re-programming patient's blood/immune systems.